What Is the Amount of the Liability That the Company

question 115

Essay

What is the amount of the liability that the company recognizes in each of the following independent cases?
a. A cereal company issues coupons that can be exchanged for boxes of cereal.It issues 1 million coupons that promise the retailer who redeems the coupons $1 per coupon.The probability of redemption of any one coupon is 8%.
b. A plaintiff files a lawsuit against the company.The probability is 80% that the company will lose.If it loses, the amount of the loss will most likely be $100,000.

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Definitions:

Mississippi River

A major North American river that flows southward from northern Minnesota to the Gulf of Mexico, serving as a critical waterway for transportation and commerce.

FOB Factory

FOB Factory, or Free on Board Factory, is a pricing term that indicates the buyer takes responsibility for goods once they leave the seller's premises.

Neiman Marcus

is a luxury department store chain in the United States known for its high-end clothing, accessories, and home furnishings.

Milan

A city in Italy, known for its significant influence in fashion, design, and finance sectors.